3 Momentum Trades for October With Ample Upside Ahead
2024.10.10 09:56
- Results and analyst revisions drive Meta Platforms higher; new highs are likely before the end of the year.
- Palo Alto Networks is turning a corner and headed to new highs in calendar Q4.
- Oracle cemented its cloud and AI infrastructure position this year, and its share price will rise another double-digits.
Momentum trading involves buying rising stocks with the idea that they will continue rising. While reminiscent of the greater fools theory, momentum trading is more than buying high and selling high. Good momentum trades combine factors that help ensure the market is bullish and capable of continuing the uptrend with catalysts to drive the market even higher.
The stocks in this article do just that: they combine numerous variables, including fundamental quality, an outlook for growth, analysts and institutional support, and catalysts for additional upside. A starting place to find such stocks in the future? MarketBeat’s list of Most Upgraded Stocks and the Momentum Alerts feature.
1. Meta Platforms to Hit $660 in 2025
Meta Platforms (NASDAQ:) has been a hot momentum trade for the last two years. The stock hit bottom in 2023, and the rebound was accelerated by the “year of efficiency” and then AI-enabled improvements in user, ad display, and revenue-per-ad metrics. The net result is a resurgence in growth, sustained in the high double-digits in 2024 expected to continue in 2025. Highlights from 2024 suggest the 2025 consensus estimates are low, providing a potential tailwind for the market in the form of outperformance and analyst upgrades to revenue and earnings targets.
Analysts support this market. The action in Q3 lifted the stock into the #1 position on MarketBeat’s list of Most Upgraded Stocks, with 35 positive revisions in the 90 days leading into October. The analysts rate the stock as a Moderate Buy and have aggressively increased their stock price targets.
The consensus target assumes fair value near the early October highs but has been up by nearly 100% in the last 12 months and is rising. The freshest targets include initiated coverage by Pivotal Research, which put the stock price at $780 compared to the $600 consensus figure. Because most targets issued since mid-summer are at or above the consensus, Meta will likely continue to move higher in calendar Q4.
The next visible catalyst for Meta Platforms is the FQ3 earnings report due at the end of the month. The analysts have set the bar high with revisions, but the consensus may still underestimate reality, expecting a sequential slowdown in YoY growth. Meta Platforms has outpaced top and bottom-line consensus forecasts for six consecutive quarters.
2. Palo Alto Networks: Growth, Cash Flow, Analysts, and Nancy Pelosi Support This Stock
Analysts’ activity lifted Palo Alto Networks (NASDAQ:) into the 2nd position on the list of Most Upgraded Stocks in late summer. The activity includes numerous revisions and an initiated coverage, pegging the stock at Moderate Buy with a high likelihood of advancing above the consensus price target. The consensus implies fair value near the current levels, but the revisions trend leads to the high-end range with high conviction. More than 80% of the targets issued in calendar Q3 are above consensus, with most suggesting a minimum of 5% upside from the critical resistance target.
The reason analysts are bullish is the company results. Sentiment dimmed when the plaformization plan was announced, but the results since have been better than expected. They reveal underlying business strength and a faster-than-expected impact from the shift, expected to drive long-term growth and wider margins. The next visible catalyst is the FQ1 results due in mid-November. Analysts are raising the bar with revisions, but consensus underestimates business strength, expecting a sequential decline in revenue and earnings.
3. Oracle: The New Go-To Source for Enterprise Cloud Database
Oracle’s (NYSE:) multi-year to cloud-based software services kicked into high gear this year. The company has emerged as a leader in AI infrastructure and services, as evidenced by a deal with Amazon (NASDAQ:). The Amazon deal will embed Oracle’s enterprise-quality services into its cloud, making it the leading choice among the three dominant cloud hyperscalers.
Results in 2024 drive an analyst upgrade cycle, and the revisions are robust. The activity resulted in Oracle shooting up the rankings, breaking into the top ten with 6th position in early October. The consensus target lags the market but supports the price action due to the revision trend. The consensus is up 35% since October 2023, and revisions lead to the high-end range above $200, a 15% upside for investors. The next visible catalyst is the FQ2 results due in early December, although results from other critical AI players may also drive the market.
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